June 27, 2006

Delaware Court Watch: The Mandatory By-Law Amendment Saga Continues

A few weeks ago, I blogged about big things brewing in the Delaware courts that could shake up shareholder proposals and Rule 14a-8. On Thursday, Vice Chancellor Lamb of the Delaware Court of Chancery issued this opinion and order in Bebchuk v. CA. In his opinion, VC Lamb denied the request for declaratory relief without prejudice because the case isn’t ripe yet. Importantly, the Vice Chancellor notes that Professor Bebchuk’s by-law is not invalid on its face – so VC Lamb has tee’d up the issue about whether bylaws can restrict pill authority under the right circumstances.

Although it looks like CA (“CA” is the company formerly known as “Computer Associates”) has avoided a bullet, it could be just temporary. I guess the next suit from Professor Bebchuk might be in federal court – if he trys to enjoin the mailing once CA files its proxy statement – as VC Lamb won’t act before the vote is in.

And Another Rule 14a-8 Development for CA…

And there developments related to another CA shareholder proposal: this proposal relates to the removal of directors from the board. Last week, an investment fund submitted this reconsideration request asking the Commission to review a no-action response from Corp Fin. In that response, Corp Fin allowed the exclusion of a shareholder proposal under Rule 14a-8(i)(8) because the proposal seeks to give shareholders the power to remove directors outside the director election context. We have posted this reconsideration request and the VC Lamb opinion in our “Shareholder Proposals” Practice Area.

Although some commentators (such as this Sunday NY Times column) have raised the profile of this issue (ie. whether there should be democracy in the boardroom), I don’t believe appeals regarding the SEC’s (i)(8) position will work since the rule is pretty clear and the Commission already has considered this issue a number of times. Of course, the Commission sometimes does change it’s position – so I guess it can’t hurt to try…

NASPP’s 14th Annual Conference: Las Vegas Baby!

With this year’s NASPP Annual Conference including the entirety of the “3rd Annual Executive Compensation Conference” at no extra charge, an overwhelming number of attendees have already registered for this three-day event to be held October 10-13 in Las Vegas. Here is a detailed conference brochure providing descriptions of the 40+ breakout panels for the NASPP’s Annual Conference.

Whether you attend just on October 12th for the “3rd Annual Executive Compensation Conference” or the entire three-day NASPP Annual Conference, you will want to reserve your room at the conference hotel soon as it’s filling up fast…